Tuesday, July 29, 2014

Nest Egg Choices

Until recently, retirees with defined contribution plans (401ks for those here in the States) had to buy an annuity, which provided a guaranteed stream of payments for life, when entering retirement.   Given the low interest rates over the last few years, it doesn't surprise FLG that this has come into question.   If you happen to retire when rates are low, then you are pretty much screwed with low payments for life. 

Buttonwood mentions that independent advisers are now going to be helping retirees.  He's skeptical of all the conflicts of interest, but this really struck a cord with FLG:
When the government abolished the need to annuitise, it was hailed as a great populist move. I worried at the time that this was a mistake; annuity rates are low because bond yields are low and people live longer. If people think that they can beat what is, in essence, the risk-free rate, they will have to take risk. And who will they blame when the risk goes wrong and they run out of money in their late 70s, as will inevitably be the case for some people? Not the independent advice centre, one suspects
Assuming a retiree does some comparison, then the annuity rate should be the risk free rate.   Therefore, anything above that is by definition risky.

FLG's Personal Wealth Management professor suggested pouring enough money into TIPS so as to guarantee bare minimum nest egg at retirement and subsequent lifetime stream of payments.  Anything above that, which necessarily entails risk, would be gravy.   When you run the numbers in a extremely low interest rate environment like today with the a multi-decade retirement, the prospect of saving even a subsistence level nest egg is downright daunting.  But that doesn't change that doing anything else pretty much necessitates taking on risk.  And with risk, somebody is going to lose out.

Saturday, July 12, 2014

FLG's Currently Listening To

Celebrity Sighting

FLG saw Ezra Klein at Pop's Old Fashioned Ice Cream in Old Town Alexandria.

Now, some of you may be saying, Ezra Klein isn't a celebrity.  Okay, but FLG perused his list and Ezra's probably more famous than some of the others on it.  So, updating the list.

Patton's Speech to the Third Army

Patton was on the other day and FLG simply cannot resist watching the first five minutes.  

What struck FLG, however, is that most people probably think that is the actual speech verbatim.  It's not.  Or at least it's not the exact speech of that attendees recall.  Wikipedia has that version.  It's a much better speech.  The movie version would have been dramatically improved with these included:

All through your army career you men have bitched about what you call 'this chicken-shit drilling.' That is all for a purpose—to ensure instant obedience to orders and to create constant alertness. This must be bred into every soldier. I don't give a fuck for a man who is not always on his toes.
I don't want any messages saying 'I'm holding my position.' We're not holding a goddamned thing. We're advancing constantly and we're not interested in holding anything except the enemy's balls. We're going to hold him by his balls and we're going to kick him in the ass; twist his balls and kick the living shit out of him all the time. Our plan of operation is to advance and keep on advancing. We're going to go through the enemy like shit through a tinhorn.

Yes, yes.  I know that second part is in there without the foul language.  But if foul language isn't appropriate when you are about to invade Normandy to fight the Nazis and fight for fucking freedom, then I don't know when it is.


Friday, July 11, 2014

Birth Control Fervor

FLG is completely astonished by these types of statements:
“The women of America . . . are saying it: It is not our boss’s business, it is our business what kind of health care we need"

FLG always tries to see the logic on the other side of any argument, but this strikes FLG as almost self-evidently ridiculous.  It's not that anybody's boss is saying their employees can't go buy birth control.   The actual fact is that there are a few very religious bosses who are saying they don't want to buy certain types birth control for their employees.  That seems like a perfectly reasonable stance.  Employer doesn't buy it.  Employee can.  Problem solved.

The other side, which seems to be, I have a right to health care...The health care choices I make are between my doctor and me...That anybody would interfere in any way is a violation of my rights...misses that having a right to health care necessitates that somebody else pay for that health care.  Once that happens, isn't it just common sense that the somebody else doing the paying (your uncle, your employer, the government) then does have an interest in the health care choices you make?

Heck, let's set aside employers and instead go to the government paying for the service.  Remember when conservatives were concerned about death panels coming out of Obamacare?   There the interest is cost, not religious objection, but the point still stands.   Once somebody else starts paying for your health care, they have an interest in what they are paying for.   For the government, the controversial bits will be related to expensive end-of-life care. (In fact, at that time, FLG remembers liberal commentators saying that if individuals were unhappy with the amount of care provided by the government, then nothing would prevent individuals from buying additional care on their own.  He'll have to find the old posts.) For closely-held, religious companies, it's certain types of birth control.  FLG has a hard time seeing how this is some gross violation of individual rights.

Although, to be completely clear, FLG would be more sympathetic if this were about extremely costly procedures or medicines, but it's not.   He has a hard time believing that the aggrieved, who are in jobs with pretty good health care coverage to even worry about this issue in the first place, would be bankrupted by paying for this out of pocket.

Friday, July 4, 2014

Wednesday, July 2, 2014

Quote of the Day

12) What if my employer says it has a sincere religious belief in human sacrifice -- can he kill me?
Yes. If your employer has a deeply held religious belief in human sacrifice, they can strap you in a cage, reach into your chest with their bare hands to pull out your still-beating heart, then drop the cage into a fiery pit. It’s a tough break, but from time to time, the Tree of Liberty must be watered with the blood of patriots. Sorry about that.

Tuesday, July 1, 2014

Dark Pools & Charts

Matt Levine:
The naive reading of that chart is: "We have a lot of institutional investors and very limited predatory trading in our dark pool." But the correct reading of the chart is: "We have software that allows us to produce this chart." The chart is a perfectly self-referential object, demonstrating only that the chart exists. The chart is a chart of how much chart there is.
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